[Congressional Record Volume 165, Number 176 (Tuesday, November 5, 2019)]
[Senate]
[Page S6375]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                        Prescription Drug Costs

  Mr. GRASSLEY. Madam President, I have a couple of issues on which I 
want to speak. Trade and section No. 232 would be my second issue. The 
first one about which I want to speak is commonsense entitlement 
reform.
  In the past year, we have seen a flurry of drug-pricing proposals. I 
am encouraged by the efforts of my colleagues here in the Senate, 
especially by Ranking Member Wyden, by my colleagues in the House of 
Representatives who agree with this effort to reduce drug prices, and 
by the President of the United States, who has already been involved 
for a year and a half in lowering drug prices. All have made lowering 
prescription drug costs one of the core principles of our efforts and 
particularly a core principle for this administration.
  I have paid attention to each of the pieces of legislation that have 
been proposed and have looked at their pros and cons closely. However, 
so far, there is only one bipartisan proposal that cuts prescription 
drug prices, that protects innovation, that lowers what senior citizens 
will pay at the pharmacy counter, and that brings along with it 
entitlement reform. The Prescription Drug Pricing Reduction Act of 2019 
is the bill I am talking about. It responsibly reduces Medicare Part D 
costs.
  As with any widely encompassing piece of legislation, there has been 
some spirited debate surrounding the different provisions of our bill. 
So I am here today, hoping to clear up some of the confusion 
surrounding a phrase that I have heard thrown around in this debate--
``price setting.'' Opponents of the legislation criticize the bill for 
price setting. The scare tactic associated with this claim is centered 
on one particular policy in our bill--that of matching the growth of 
government subsidies that drug manufacturers receive to the rate of 
consumer inflation.
  When I set out at the beginning of this year to create a piece of 
bipartisan legislation that had real and meaningful change, I knew the 
focus had to be on individual Americans. That is why we kept out-of-
pocket costs at a level at which seniors could see relief. That is why 
we banned spread pricing, which games the healthcare system to the 
detriment of the beneficiaries and the taxpayers. That is why we 
created a new way of paying for lifesaving but very costly Medicare 
drugs. That is why we kept the growth of government subsidies in 
Medicare Part D to the rate of inflation.
  Unlike other proposals, the Senate Committee on Finance's policy does 
not tie the launch price to an artificially low price. The bill doesn't 
stop a drug company from recouping its research and development costs, 
which will lead to more innovation.
  What the Part D inflationary rebate does is really quite simple. 
After launching, if a drug manufacturer chooses to raise the price 
above the rate of inflation, it has to return the difference for the 
drugs paid by Medicare. This policy limits government subsidies in 
order to provide predictability for the Medicare Program. At the same 
time, it provides protection for the American taxpayer. That is simply 
all it does. Any subsidies that the pharmaceutical companies would have 
received from an exorbitant raise in price is then returned to 
Americans rather than to line pharma's pockets. The inflation rebate 
incentivizes companies to stabilize their pricing, and the taxpayers' 
money is used more prudently and more efficiently.
  You have all heard of CATO, the research organization and policy 
organization. CATO is one of the Nation's leading libertarian and free 
market organizations. It has praised the bill for its significant cost 
savings for the taxpayers. Does anyone really think a libertarian 
organization would endorse price controls? In its analysis of the bill, 
CATO wrote that this bill ``would not impose price controls'' and 
``would reduce wasteful Medicare spending.'' CATO also acknowledged 
that these ``commonsense tweaks to a bloated entitlement program are 
encountering strong opposition . . . mostly from those who would not 
make quite as much money off the taxpayers.''
  We all know that Medicare's finances are worsening. The program is 
projected to become insolvent within the next 6 years if we continue 
down this very same path. In getting back to my bipartisan bill, the 
Grassley-Wyden bill will ensure that the Federal Government uses 
Medicare's budget to pay for lifesaving treatments in a fiscally 
responsible manner.
  This goal is not without precedent. For those who say we are acting 
in an unprecedented way and are setting prices, I say it isn't setting 
prices. They forget that throughout the American healthcare system, the 
government has, at one time or another, set up different ways to 
constrain high and rising costs.
  For example, States have not been allowed to pay Medicaid providers 
at a rate that has been higher than Medicare's. Another example is in 
the Medicare Program. Medicare Part A has paid for the operating costs 
associated with acute inpatient care and has used the inpatient 
prospective payment system, or what is referred to as IPPS. Congress 
enacted the inpatient prospective payment system to constrain the 
growth of Medicare's inpatient hospital payments by providing 
incentives for those facilities to provide care more efficiently.
  Congress also requires that the concept of budget neutrality be 
applied to a number of Medicare payment systems, including to provider 
payments. This is simple. In other words, the government says that if 
one provider gets an increase, another provider is reduced.
  Finally, the Center for Medicare & Medicaid Innovation, within the 
CMS, is required by statute to enforce financial controls on total 
Medicare spending. The Center can only test different ways to pay for 
services in Medicare and Medicaid if they are expected to lower costs 
while they maintain quality. So this idea of using taxpayer dollars 
responsibly and in a targeted manner exists in many facets of the 
American healthcare system.
  My point is, while some call the inflationary rebate in Part D a 
price control, I urge all of the Members to consider how Congress is 
using measures to contain costs currently. Isn't it the fiscally 
responsible thing to do when Federal taxpayer dollars are being spent 
by those of us in Congress? Shouldn't we do what we can to contain 
costs? After all, it is not what hospitals, doctors, and pharmaceutical 
companies may charge; it is about what the American taxpayer will pay 
for services. That doesn't fall into the category of price controls. At 
the markup for my prescription drug bill, even the Director of the 
independent Congressional Budget Office agreed with me.
  I could continue to give examples of budgetary tools in the toolbox 
that Congress uses in an attempt to be fiscally responsible with regard 
to Medicare and Medicaid. I could also continue to provide examples of 
outrageous drug costs. Yet the bottom line is that the Prescription 
Drug Pricing Reduction Act of 2019 is a win for Americans across the 
board.
  Seniors will pay less out of pocket; taxpayers will know their money 
is being used appropriately; and drug manufacturers will continue to be 
able to innovate.
  That is why Ranking Member Wyden and I strove to achieve these things 
in the very beginning. I urge my colleagues to keep these 
considerations in mind, and hopefully my colleagues will support this 
legislation as a way of answering the concerns that constituents 
express in almost every State. At least in the 99 county meetings that 
I hold in Iowa every year, doing something about the pricing of 
prescription drugs comes up. It has to be that way all over the 
country.